Hit and miss with Uploadify - IO Error

The files I upload through Uploadify are hit and miss.. Some complete successfully, while others light up in red and display a message, "IO Error". There doesn't seem to be a particular pattern to which files this happens to. Anybody have any idea what's up with that?

Update, I figured out it was only occurring on ImageUploadFields while I selected multiple images. ImageUploadFields are supposed to only accept a single file, while the Multiple....UploadFields are meant for multiple objects. I guess the question now is why doesn't the upload field prevent you from selecting multiple files, or at least gives a more specific error than an "IO Error" message?

Well, I tried selecting a single file and uploading that, it went through fine. Then I tried selecting multiple files, and while the upload form accepted them without a protest, some images would fail the upload. This was tested on an ImageUploadField, which is supposed to handle only one image file.

I think the problem is with the jquery uploadify widget being Flash sensitive - I've been bashing my head trying to figure out why it suddenly stopped working then discovered the Flash version problem. Working on one computer but not the other... :(

I have had an on going IO error problem of months. Can figure it out.
All upload forms, (as part of Uncle cheeses gallery module, via the Files & Images section etc..)
The only way I can seem to upload an image is via the Pixlr module.. it is work perfectly.

Investigating I found that any new folder I create with the Files & Folders 'create' feature, is set 755, and for some reason I am unable to upload to it via FTPs unless set to 777.. so I do that. Now I can upload images via FTPs, but not via the CMS.
Still IO error. (except with Pixlr)

Could I perhaps have a user/group problem on my server? That might explain why my FTPs login can't upload unless dir is set 777.

What user is the CMS trying to act as? How can I check? Anyway to check what the Pixlr module is running as?
Any other guidance??? Any way to reset the vhost directory to defaults?